U.S. Export Policy Toward Iraq: An Agenda for Tomorrow

by Kenneth R. Timmerman

I am an author and independent journalist, and have
specialized over the past ten years in Middle East security
questions, with particular emphasis on the proliferation of
weapons of mass destruction.

My latest book, which was published last year by Houghton
Mifflin, is called The Death Lobby: How the West Armed Iraq.
It is the story of how Western governments, companies and
their bankers conspired in an orgy of greed and error to build
up Saddam Hussein's military capability. In one review, the
New York Times said the book was "in a class by itself."

I began reporting on Iraq in 1984, and first met senior
officials in the Iraqi military-industrial establishment in
1986. I returned to Iraq on several occasions after that, and
published many early warnings on Iraqi military power and the
growth of the Iraqi arms industry. The Death Lobby details the
contributions made by more than 450 Western companies to
Iraq's military buildup. (Oral: For the full story of how
Saddam Hussein filled up his shopping cart with advanced
weaponry and military production equipment and managed to pay
for it all on credit, read my book.

Was the United States Iraq's principle supplier of arms or
advanced production technology? Certainly not. Those honors
must go to France and Germany. Was the American contribution
to Saddam Hussein's military build-up significant? Absolutely,
in financial terms, in terms of the technology actually
supplied, and for the political impact this had in emboldening
the Iraqi regime.

From January 1985 through August 1990 the Department of
Commerce approved 771 license applications valued at $1.5
billion. The following statistics are drawn from an analysis
of 474 of these licenses, worth $1,272,466,525. My criteria
for selecting licenses for inclusion in this data base were
their monetary value, the Iraqi end-user, and the sensitive
nature of the equipment. While some items have invariably been
missed, it is my belief that the conclusions of this analysis
accurately reflect both the reality and the intent of U.S.
export licensing policy toward Iraq.

Conventional military sales

Contrary to claims that have been advanced here and there,
the United States government did indeed approve conventional
military sales to Iraq.

The single largest sale was a $491 million proposal to sell
Iraq several thousand military cargo trucks. This particular
deal was licensed on two separate occasions by the Department
of Commerce, in April 1986, and in April 1988, but major
shipments never occurred. According to a report by the
Commerce Department's Inspector General, the records on these
licenses were falsified when they were submitted to Congress
last year to delete the mention "military."

Notwithstanding the clear military nature of this sale, it is
my belief that Iraq never intended to purchase these trucks
but instead used the prospect of a major, relatively
uncontroversial sale of this kind as an enticement to American
businessmen and to the American government. It was a tactic
Saddam and his procurement agents used again and again: if
Washington would just "play ball" on more critical exports of
sensitive technology, then a vast new market would open up in
Iraq for American businessmen.

American military sales to Iraq began in December 1982, when
the Reagan Administration agreed to support the sale of 60
Hughes MD 500 "Defender" helicopters to Baghdad, despite their
obvious military applications. The Hughes "Defender" was
advertized by Hughes as a dedicated anti-tank machine; an
earlier version was used in Vietnam equipped with TOW missile
launchers. A few Senators objected at the time that the
proposed sale was not in the interests of the United States,
but the Commerce Department informed them that their
objections were irrelevant, since the sale of aircraft
weighing less than 10,000 pounds did not require an export
license to countries not subject to Foreign Policy
restrictions. (Iraq was taken off the terrorism list that
March). All 60 helicopters were delivered by the end of 1983.
Iraq paid for them in a barter agreement through Chevron Oil.
The deal was brokered by the Lebanese-American intermediary,
Sarkis Soghenalian, and is described in some detail in my
book.

In February 1984, the Italian subsidiary of Bell Textron,
Agusta Bell, agreed to sell Iraq eight AB 212 military
helicopters equipped for anti-submarine warfare, worth a $164
million. They were intended equip the Lupo class frigates Iraq
had purchased from Italy four years earlier. This sale also
required U.S. approval, but to my knowledge was never
submitted to Congress.

Following its sister company in Italy, Bell Textron got into
the act in late 1984 with a proposal to sell 48 Bell Textron
214 ST utility helicopters. A version of this helicopter, sold
around the world as a military transport and commando support
machine, had been reclassified as a civilian aircraft, and
arms broker Sarkis Soghenalian proposed selling them to Iraq
for "recreational" purposes and "VIP transport." This deal was
approved by the Reagan Administration.

When the delivery of these helicopters was discussed with
U.S. Embassy officials in Baghdad in late 1984 and again in
early 1985, they were concerned that these aircraft could be
used for Medevac purposes or as troop carriers. But in a
written reply to Congress, Secretary of State Shultz stated in
November 1984 that "increased American penetration of the
extremely competitive civilian aircraft market [in Iraq] would
serve the United States' interests by improving our balance of
trade, and lessening unemployment in the aircraft industry."

Here is a photograph I took of one of these helicopters at
the al Muthana airbase outside Baghdad in April 1989. As you
can see, it has been painted in the colors of Iraq's Army
Aviation Corps. The only "recreational" purpose it may have
been used for is the gassing of Kurdish civilians in northern
Iraq.

Probably in conjunction with the Bell Textron sale, the
Commerce Department approved 13 other licenses, worth
$102,758,428, for "civilian" helicopters and spare parts. One
1986 license is described as "Navigation and support equipment
to maintain the two [] helicopters exported to President of
Iraq." During the winds of Desert Storm Saddam Hussein could
have fled the country on board an American helicopter, and
perhaps have escaped detection. It is my understanding that
the Defense Department protested these sales vigorously, but
was overruled by State and Commerce during one of the many
bureaucratic turf battles over Iraq licensing policy.

Another, particularly egregious case of U.S. military
equipment winding up in Iraqi weapons systems involves a Dutch
company called Delft Instruments N.V. Delft purchased
infra-red sensors and thermal imaging scanners from U.S.
defense contractors, and re-exported them illegally to Iraq.
The Iraqis used this equipment successfully during their night
attack across the border into the Saudi town of Kafji. U.S.
intelligence had been unaware that Iraq possessed night vision
equipment for its Soviet-built tanks, until it cost the lives
of Allied soldiers.

Dual-Use Equipment

The International Atomic Energy Agency (IAEA) has discovered
a very broad range of U.S.-built equipment in Iraqi weapons
establishments engaged in nuclear weapons development. Some
items have been catalogued as "key equipment" for making the
bomb, and have been destroyed by the IAEA. Other U.S.-built
items will remain under long-term IAEA monitoring, to ensure
that the Iraqis do not use them in future attempts to build
the bomb.

U.S. equipment found in Iraqi nuclear weapons establishments
includes:

One entire facility, a tungsten-carbide manufacturing plant
that was part of the Al Atheer complex, was blown up by the
IAEA in April 1992 because it lay at the heart of the Iraqi
clandestine nuclear weapons program, PC-3. Equipment for this
plant appears to have been supplied by the Latrobe,
Pennsylvania manufacturer, Kennametal, and by a large number
of other American companies, with financing provided by the
Atlanta branch of the BNL bank. .

To my knowledge the Kennametal sales were never subject to
licensing by the DoC; neither were sales of machine-tools by
U.S. companies to numerous other Iraqi weapons plants .
Furthermore, Iraq has succeeded in hiding large quantities of
machine-tools and advanced production equipment, making it
difficult to evaluate with any certainty the true extent of
Iraq's unconventional and conventional weapons manufacturing
capability, or how long it might take for Iraq to resume its
nuclear weapons program once UN sanctions are lifted.

Electron Beam Welders

When the President insisted on Oct. 19 that there was not
"one scintilla" of evidence that U.S. equipment had made its
way into the Iraqi nuclear weapons program, many people
including David Kay and Gary Milhollin pointed immediately to
the Leybold Heraeus electron beam welder, which was licensed
by Commerce for sale to the Nassr State Establishment for
Mechanical Industries in Taji, Iraq.

This particular piece of equipment had been used by the
Iraqis in their uranium enrichment program. Leybold's parent
firm in Germany apparently supplied what the IAEA called
"application-specific fixtures," which enabled the welder to
hold six centrifuge rotors simultaneously while maraging steel
end caps were welded in place - a high precision and vital
step in building the most sensitive part of the enrichment
centrifuge. Leybold's offices were searched by German Customs
on July 6, 1992, and the company is now subject to a criminal
investigation.

But the IAEA found not one but three Leybold EB welders; and
so far, nobody has explained how they made their way to Iraq.
The Pentagon is currently investigating whether these machines
had in fact been manufactured in the United States and
exported to Germany, where Leybold modified them before
shipping them on to Iraq. Documents seized in Iraq by the IAEA
show that Leybold began discussing these sales directly with
the Iraqi Atomic Energy Organization in 1982.

Main-frame computers

It is widely acknowledged today in scientific circles that
advanced computers give the edge to Third World countries,
such as Iraq, who are seeking to develop a nuclear device
without going through the costly and political perilous
process of a nuclear test. Using high-speed computers and
graphics work stations it is now possible to simulate a
nuclear blast, thus allowing design improvements to be
developed in a matter of months that used to require long and
arduous live testing. The IAEA discovered documents in Iraq
which proved beyond a doubt that Iraq was using mainframe
computers in precisely this way, and had gone through five
major design upgrades of a nuclear explosive device, all
without undertaking a live nuclear test. Those documents, as
you may recall, saw the light of day thanks to the
determination of David Kay, who deserves a tribute from all of
us who are concerned with the proliferation of unconventional
weapons technology. Without David's work on the ground with
the UN inspection teams, we might never have pierced some of
the secrets of the Iraqi nuclear weapons program.

My analysis of the Department of Commerce records shows that
in the United States alone, Iraq received a total of 370
export licenses for computers and advanced scientific analysis
equipment from May 1985 through August 1990, worth a total of
$114,637,902.

Of these, 167 licenses worth $58,095,322 concerned advanced
computing systems. The most widely selling item were VAX
machines from Digital Equipment Corp. Other frequently sold
items included high-speed oscilloscopes, radio-spectrum
analyzers, integrated circuits, gas chromatography equipment,
spectrophotometers, and a wide range of electronics
manufacturing and test equipment. All were used in Iraqi
weapons plants, many in the manufacture of ballistic missiles
and in nuclear weapons research and development. Typical
purchasers were the Iraqi Ministry of Industry (and Military
Industrialization), the Ministry of Defense, and known weapons
establishments such as Saad 13, Saad 16, Huteen, Badr, and
Nassr.

To date, however, Iraq has only acknowledged to possessing a
single IBM 370 mainframe, located at the Thuwaitha nuclear
research center. Earlier this year, an IAEA team visiting
computer facilities in Baghdad discovered six other
mainframes, four IBMs, a VAX Intergraph 6310, and a Hewlett
Packard Model 3000.

But let's take a closer look at what was actually sold.
Hewlett Packard, for instance, received 57 licenses to export
computer systems to Iraq from the United States, worth
$3,147,608. HP systems were sold to Thuwaitha, to the Saad 16
research and development center, and to a variety of heavy
engineering complexes that were manufacturing parts of uranium
enrichment centrifuges and calutrons. Hewlett Packard
maintained an office in Baghdad throughout most of the 1980s,
and was a major exhibitor in the yearly Baghdad international
trade fair. All these exports were approved by the Department
of Commerce under the Reagan and Bush Administrations.

Iraq's second-largest computer supplier in the United States
was Digital Equipment. DEC operated in Iraq through a UK
franchise outfit, International Computer Systems (London) Ltd,
and its sister company, Computer and Communications Services
(CCS) in Amman, Jordan. Both are controlled by a Jordanian of
Palestinian origin, Isham Fayez Samarra. ICS received 49
export licenses from the Department of Commerce to sell
computers to Iraq worth $16,377,132. Once again, these
computers were sold to known Iraqi weapons establishments and
procurement fronts, including the Nassr State Establishment
for Mechanical Engineering, Saad 16, the Scientific Research
Council, the Ministry of Industry and Military
Industrialization, and the State Establishment for Heavy
Engineering Industries (SEHEE). This latter was deeply
involved in manufacturing parts for uranium enrichment
centrifuges and calutrons.

The Super Gun

Evidence is now beginning to emerge that American companies
were engaged in an effort to ship an entire production line to
Iraq, to manufacture large diameter gun barrels for the
Super-Gun project.

U.S. manufacturing equipment for this project was shipped to
the Saddam General Establishment, Faluja, Iraq in 1989 and
1990. An export license was awarded for at least some of these
shipments to RD&D International, a Vienna, Virginia
company which is under criminal investigation. The RD&D
license was "embargoed" following August 2, 1990, as were many
other deals for advanced military production equipment which
had received Commerce Department approval in application of
the President's new Iraq policy. In other words, if Iraq had
not invaded Kuwait, it would have received the goods.

Among the equipment sold to the Saddam General Establishment
apparently for the supergun project was a 5-axis, 1250 mm CNC
vertical turning, milling and slotting center; a 9000mm long
CNC gantry mill ,worth $1,050,000; two 36 inch by 30 foot CNC
lathes; a 15 inch Chamber boring machine; and a 36 inch by 36
foot combination boring and turning lathe. All of this
equipment, of obvious military purpose, would have been
prohibited for export to the Former Soviet Union. But
apparently, not to Iraq.

The super-gun procurement package was worth tens of millions
of dollars. And like so many Iraqi purchases in the United
States, it was financed by the BNL in Atlanta.

A parallel effort by Iraq in June 1990 to purchase a large,
refurbished forge from a Pennsylvania company, was apparently
blocked by the Pentagon's Defense Technology Security
Administration, in conjunction with the U.S. Customs Service.
This forge had been used, decades earlier, to cast the barrels
for the 16 inch guns on the four surviving battleships of the
US Navy.

What the Administration Knew

The Commerce Department knew as early as March 1985 that Iraq
was seeking advanced American scientific instruments and
computers for Saad 16, a giant ballistic missile research and
development center near Mosul. How did Commerce know this?
Simple. The Iraqis informed them of their request in writing.

At the same time Commerce was nimbly approving export
licenses for the German contractor in charge of this scheme,
other government agencies were attempting to win international
agreement to set up the Missile Technology Control Regime,
which would have outlawed precisely this type of sale.

Nor did the United States government ignore the fact that
Iraq was developing a broad-based chemical weapons
manufacturing base. The State Department delivered the first
of more than 100 official "demarches" or protests to the West
German governments on sales of CW technology to Iraq by German
companies in 1983. Despite this, between 1985 and 1989 the
Commerce Department approved fourteen separate shipments
described as "Bacteria, fungus, protozoa," most of which were
sent directly to the Iraqi Atomic Energy Commission.

How about the nuclear weapons program? Records recently
obtained by Congressman Gonzales and the House Banking
Committee show that the CIA was warning Commerce, the State
Department, and presumably the White House, about Iraq's
nuclear weapons program in 1989 if not earlier. By June 1989,
according to a November 21, 1989 State Department memo, the
CIA had already reported to U.S. government agencies on the
activities of Iraq front companies operating in the United
States and Western Europe to purchase equipment for the Iraqi
nuclear effort. Furthermore, the memo states, the intelligence
community had developed a long list of "bad end users" known
to be working on nuclear, ballistic missile, and biological
weapons projects . Despite this knowledge, the Administration
went ahead with its policy to expand trade with Iraq. This
policy was codified as National Security Decision Directive 26
in October 1989.

The most active of the front companies operating in the U.S.
was Matrix Churchill, a wholly-owned Iraqi entity with
manufacturing facilities in Coventry, England, and a
procurement office in Solon, Ohio. Matrix Churchill was used
by Iraq starting in 1987 to procure a wide range of advanced
military production technologies, including four and five axis
CNC machine-tools that even today would be forbidden for
export to countries such as Russia.

In Great Britain, where the company was based, the government
granted export licenses to Matrix Churchill to sell 176
precision machine-tools to Iraq from 1987-1989, according to
information I have compiled from official records made
available to the House of Commons late last year. Most of
these machines were shipped to the Taji and the Huteen
facilities, which contributed to Iraq's nuclear and
conventional weapons programs as well as to the supergun
project. The IAEA has tagged some of these machines for
long-term monitoring, because they had been used for
manufacturing components for uranium enrichment centrifuges.

In the United States, Matrix Churchill served as a "cut-out"
for purchases from more than fifty American manufacturers. It
made massive purchases of tungsten-carbide machine tool bits
from Kennametal, of Latrobe, Pennsylvania; it purchased large
quantities of platinium and rhodium; it jobbed out an advanced
glass and ceramic fiber plant, suitable for manufacturing
ballistic missile nose cones and perhaps centrifuge rotors to
Glass International Inc, of Chino, California; it was working
hand-in-hand with Industrias Cardoen of Chile to purchase
zirconium sponge and special equipment to build cluster bombs.
And yet, this company was allowed to operate freely until
September 1990, when it was finally closed down by U.S.
Customs.

I have mentioned the Matrix Churchill case to illustrate the
fact that we are confronted here with two separate, but
related problems. The first involves U.S. policy toward Iraq.
The mountain of evidence now available suggests that the Bush
Administration was pursuing covert policy objectives, yet to
be revealed, which clearly contradict the Administration's
public committment to non-proliferation. The United States
made a major contribution to the expansion of Iraq's military
capabilities. This contribution increased dramatically with
the change of administration in January 1989, and was
formalized by NSD 26, which specifically authorized sales to
conventional military facilities in Iraq.

The second and larger problem concerns the gaping loopholes
in our export control system, and what to do about them.

Reforming the Export Control System

Following the lead of President Reagan, who believed that
proliferation concerns should take a back seat to commercial
imperatives, the Bush Administration has failed to provide
leadership to the international community in this area,
actually vetoing several Congressional bills that would have
put the United States in the forefront in preventing the
proliferation of mass destruction weapons. As paradoxical as
this may seem, Germany today has the toughest export controls
on its books of any Western nation, while the United States is
still wondering whether it has an export control problem.

Here are some of the steps I would take to fix the problem if
I were in charge of U.S. export licensing policy.

1) Withdraw export licensing from the Commerce Department,
which is primarily responsible for promoting U.S. exports, and
establish an independent Export Control Agency.

I believe such an Agency should be subordinated directly to
the White House, to ensure that everyone knows who will take
the blame if there are mistakes in the future. Is it the
President's policy to build up Iraq's military capabilities?
The way the system works now, nobody can tell for sure; by
placing export controls under White House authority, there can
be no doubt as to ultimate accountability.

2) Proliferation concerns should determine what technologies
should be subject to new export controls, since proliferation
has become the security problem of the 1990s and beyond.

For example, machine-tools that were not controlled in the
1980s because they fell below the standards of the Soviet
military industry formed the backbone of Iraq's military
industrial complex. If we continue to use Cold War standards,
the net effect will be to bring the military industries of
countries such Iran, India, Pakistan, Syria and Iraq up to
Cold War standards. This will result in an unacceptable
financial burden on the American taxpayer, as America is
called on time and time again to take out the very dictators
failed government policies helped to create.

3) Export licenses to countries of proliferation control
should be subject to mandatory review by the Department of
Defense and the U.S. Customs Service.

These agencies maintain lists of "bad end-users" against
which proposed exports should be checked on a routine, on-line
basis, which is not the case today.

4) Internationally, the United States should take the lead in
establishing a single, unified, multilateral Proliferation
regime, to replace the four separate regimes (nuclear,
chemical, missile, and dual-use technology) that currently
exist today. The new regime should review strategic exports to
the Third World before they occur, much as COCOM reviewed
strategic trade with the Soviet Union during the Cold war.

5) Lists of approved exports should be published by member
countries, to encourage greater "transparency" in the
licensing process. (As it stands today, export licensing
records remain classified). Respectable companies doing
business with reliable customers will have no shame in making
their contracts public. It is primarily the handful of
violators who continue to lobby for secrecy.

6) Russia, China, and other non-Western exporters of military
production equipment and nuclear technology should encouraged
to become partners in elaborating multilateral proliferation
guidelines, and should be assisted in setting up effective
export control systems.

Finally, I would support strong legislation that would impose
mandatory sanctions on foreign companies which fail to respect
the new multilateral export controls, irregardless of where
the violation occurs. All too often when an American company
refuses a lucrative export contract because it would violate
U.S. law, a French, or German, or Japanese competitor leaps
into the breach, because their governments are lax on export
control enforcement. Mandatory sanctions against violators
would help to prevent foreign businesses from taking unfair
advantage of U.S. companies who choose to play by the rules.

I believe that the Iraqi experience is repeating itself in
countries such as Iran, India, Pakistan, and Syria, even as we
speak. There is still time to stem the flow of strategic
technologies to such countries; but without a major reform of
our current system, soon it will be too late.